Mennen Medical, a privately held Israeli manufacturer and marketer of cardiac cathetherization and electrophysiology systems, as well as patient monitoring and clinical data information solutions, is planning to expand by way of small acquisitions and, apparently, also a major merger. Mennen chairman Ran Nimrod said today that the company would make further acquisitions, ahead of its IPO on Nasdaq or London’s Alternative Investment Market (AIM) sometime next year.
As part of its expansion program, Mennen announced today that it had acquired Medical Thermoregulation Expertise (MTRE) for the ludicrous sum of NIS 10 million. MTRE is a mature company with annual sales of $1 million; yet its investors, Clal Biotechnology Industries Ltd., The Challenge Fund-Etgar L.P., Neurone Ventures, Koonras, Technorov and others, in effect wrote it off their books. MTRE’s largest shareholder, Clal Industries and Investments (TASE: CII) held a 30% share and recorded a write-down of $4-5 million on its investment. “The company was not that bad a failure that they closed it, but they still didn’t think it was successful enough to justify investing further efforts in it,” said Nimrod today.
So why did Mennen acquire the problematic company? “A medical device company cannot survive on one single product,” explained Nimrod, “it’s not worth running a company and distribution chain for just that. MTRE sold well but lost money, albeit not in substantial amounts, yet the companies did not see in it the potential to function as an independent entity. Under our ownership, it has been making a profit from day one, because we scrapped the duplication in jobs and distribution chains.” Other industry sources said, however, that MTRE suffered from acute technological and managerial problems, as well alternative technologies that have proven successful. It was also at a disadvantage because, as Nimrod mentioned, it offered a single product to a small market.
Globes: MTRE’s previous investors may not have thought it had a future, but they will have certainly seen how you plan to make a profit from it. Why didn’t they ask for a higher sale price?
Nimrod:”Apparently, they gave up on a lucrative exit. This way they at least got something.”
Published by Globes [online], Israel business news - www.globes.co.il - on June 5, 2006
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